All good consultations come in threes

ARC President Tony Wallace considers a triple attack on ARC members.

J uly and August were once the halcyon days of summer; annual leave meant that it was often one of the lulls in the annual cycle, but not this year. I have found my time over the past few weeks dominated by three political issues, each coming from outwith HMRC but each likely to have a profound impact on our members and our activities as a union.

“The holiday period includes “summer (August) = 22 working days (4.2 weeks)”. This was the entire period of the consultation! It did not give unions time for meaningful consultation with members.”

The new Conservative government has hit the ground running, what with the Summer Budget and associated spending review, legislation to cap exit payments in the public sector at £95,000 and further curbs on trade union activity. As you would expect of a union representing senior members of the Civil Service, ARC is a strictly non-political organisation, but that does not mean that we are without a view when it comes to matters impacting on our members, our organisation or the wider trade union movement of which we are part. When it comes to protecting jobs, the terms and conditions of our members, our union and our right to organise, we have a strong and loud voice.

As part of the legislative process government is supposed to be committed to a consultation process, allowing interested parties the opportunity to have their say. What is downright worrying on this occasion is the extremely tight deadline we have been asked to work to in order to respond to the proposals on the exit cap and on the Trade Union Bill in particular.

To take the exit cap as an example: the consultation was launched on 31 July 2015 with a deadline of 27 August 2015. The government’s Consultation Principles state that: “Timeframes for consultation should be proportionate and realistic to allow stakeholders sufficient time to provide a considered response, and where the consultation spans all or part of a holiday period, policy makers should consider what if any impact there may be and take appropriate mitigating action.” The holiday period includes “summer (August) = 22 working days (4.2 weeks)”. This was the entire period of the consultation! It did not give unions time for meaningful consultation with members. There has been no engagement of civil servants (or other public servants) or their unions in the policy making process.

You would almost think that they didn’t want to hear our views; they got them anyway.

The Spending Review

In mid-June, just over a month after the general election; Iain Campbell and I had the opportunity to meet with David Gauke, the returning Financial Secretary to the Treasury. ARC enjoyed a cordial relationship with Mr Gauke over the life of the last Parliament. We always found him receptive to our calls for the resources required to secure the delivery of HMRC’s business from as far back as 2010 when, through our Defeat the Deficit Campaign, ARC was instrumental in securing almost £1bn of investment in HMRC; an investment which, over the life of the last parliament provided a return of 18:1 rising as high as 62:1 in areas such as Large Business.

Iain and I made the case that to deliver on promises made in the Conservative manifesto to raise a further £5bn in tax would require a commensurate investment this time around. We were pleased to hear on Budget day that the Chancellor shared that view. George Osborne announced three quarters of a billion pounds of investment in HMRC to go after tax fraud, offshore trusts and the hidden economy; as it happens that was precisely the figure Iain and I put to David Gauke in June.

Once the Budget dust had settled the investment had risen to £1.3bn but expectations had also been raised. In addition to tackling fraud and the hidden economy HMRC will raise: £7.2 billion by tackling tax avoidance and evasion, £9bn from tackling imbalances in the tax system and nearly £3bn from avoidance and tax planning – a whopping £19.2bn over the life of this parliament. That is a big ask and, while I know that our members will do everything that they can to deliver on that, it is not without risk. The Office of Budget Responsibility (OBR) analysed the yield forecasts and made two very substantial caveats. They warned about the inherent uncertainty in at least 12 of the measures, pointing out that “This Budget contained an unusually large number of HMRC compliance measures, which all shared a significant uncertainty associated with the baseline against which they should be assessed”. All of this brings me to the sting in the tail.

“Our members may earn higher than the average salary in Britain, but as we well know we also earn significantly less than we would by doing equivalent jobs in the private sector. The government almost appears embarrassed that they employ senior, professional, public servants at all.”

On 21 July the Treasury published A Country that Lives within its Means: Spending Review 2015 (SR15), inviting non-protected government departments, including HMRC, to set out plans for cuts to their resource budgets. Departments were told to model 25% and 40% reductions in real terms by 2019-20. The cuts are intended to reduce public expenditure by an additional £20bn over the life of this Parliament and represent a colossal reduction in funding. Just to put that into some perspective in the HMRC context consider this:

In July 2014 NAO reported on how HMRC resourced compliance work. For 2015/16 it forecast that HMRC’s running costs would be £3,097m made up of compliance costs of £1,157m and other costs £1,940m. If, following SR15, compliance resources are ring-fenced then on these figures an overall cut of 25% (£775mn) would mean slashing non-compliance costs by 40%. Whilst an overall cut of 40% (£1,240mn) would mean a staggering 64% reduction in non-ringed-fenced areas. Neither is desirable, or realistically achievable. Cuts of that order will put ordinary delivery at risk and make customer service and basic operations hard, if not impossible, to deliver.

In our response we made the point that for SR15 to take away what the Budget has given would be madness and would seriously jeopardise our chances to deliver on the Government’s agenda. There is an alternative to cuts through measures to increase productivity by:

Investing in the skills and number of senior HMRC professionals. The return on the investment in each tax professional is at least 30:1 and can be as high as 150:1.

Investing in the basics: the core message of Building our Future 3 has been that compliance is all our business. If people cannot efficiently call HMRC and have their post dealt with promptly then we create a positive barrier to baseline compliance for the vast majority of the British people and businesses that want to do so.

Improving the output of HMRC people by a further investment in technical training and by building better links to professional bodies.

Acting to stop the haemorrhage of skilled professionals moving to the private sector by closing the pay gap.

We have sent a copy to David Gauke; he has listened before, let’s hope that he does so again.

The Trade Union Bill

On 15 July 2015 the Government published draft legislation and three consultations under the banner of the Trade Union Bill. The Bill will be debated in both Houses of Parliament over the coming months. I would urge you to take some time to read what is proposed; this is a serious further restriction on the power of unions to organise and allows government to take yet more power unto itself to step into areas which should be within the remit of employers and their employees. You can get more information direct from the TUC and we will be asking for your help to stop a further erosion of your basic human rights.

The draft Bill contains wide-ranging measures designed to restrict the ability of unions and our members to organise collectively and to take industrial action. It includes: thresholds for turnouts in strike ballots, restrictions on the right to picket and the removal of the ban on the use of agency workers to replace striking workers. It requires employers to report on resources allocated for facility time in the public sector, and in organisations providing public services. Although that reflects the current practice in most of the civil service it potentially goes further; government is taking powers to impose a cap on the amount of paid facility time in each public authority and will have the power to reduce the statutory right of trade union officials to paid time off. It gives the government the power to interfere in individuals’ contracts of employment and collective agreements which provide for facility time, even though these are voluntarily agreed by public sector employers. But that is not all! It extends the role and powers of the Certification Officer, including a new power to impose financial penalties on unions. It brings with it extensive new bureaucratic measures and we will be expected to meet the costs of both the existing and onerous new additional reporting requirements through a levy.

ARC, uniquely within the FDA, maintains a political fund. It has never been used and nor will it be used to fund the aims or ends of any political party. However Political Funds are also used to pay for a variety of campaigning activities. We maintain ours as a safeguard should we ever be challenged on our right to engage in campaigning activity on matters like Defeat the Deficit or indeed around the proposals we make in our SR15 submission. We are currently required to ballot you every ten years to decide whether we should maintain a political fund and members always have the option to opt out. Under the proposed regulations, you would be required to opt-in every five years imposing a wholly unnecessary additional burden and cost on us as a union. We will be required to report annually on levels of industrial action and on how political funds have been used.

ARC only embarks on industrial action as a last resort and our members have engaged in national industrial action only very rarely. Nevertheless it is a fundamental human right for all working people to have the option to take industrial action and withdraw their labour. The government’s proposals will unjustifiably restrict the right of trade unions to organise in the UK by placing them under financial, operational and legal burdens which go far beyond those placed on other British campaigning organisations. The Bill will impose statutory thresholds on strike ballots, thresholds not reflected anywhere else in the law of the United Kingdom. For it to be lawful we would be required to get a minimum 50% participation rate in any strike ballot, furthermore for people working in ‘important public services’ or ancillary activities there would need to be a 40% ‘yes’ vote amongst those entitled to vote. Meanwhile, there is no statutory threshold to reach in the formation of a government; you can become Prime Minister with the support of 36.9% of those voting.

This is an unwarranted and out-of-date piece of legislation designed to further restrict our ability to organise collectively to protect our jobs, our livelihoods and the quality of our working lives. We have submitted our consultation document but that will not be the end of the matter, we will be asking for your further help in the coming months

It is your union and your rights that are under attack.

Public Sector Exit Cap

And finally, there really is no good news this month.

In 2010, the outgoing Labour government decided to introduce restrictions on redundancy awards for public sector workers. Following a challenge in the courts the new Conservative Government introduced a new set of arrangements following negotiation with a number of unions including ARC through our parent union the FDA. At the conclusion of those talks Francis Maude, leading the negotiations on behalf of government, described the resulting deal as “fair for the longer term”. Now, my idea of “longer term” clearly differs from that of Conservative ministers but it was clear that the knives were being sharpened again as early as January of this year when the then Exchequer Secretary to the Treasury, Priti Patel, announced that the Conservatives would end “six figure pay-offs” in the public sector. The subsequent announcement in the Queen’s Speech that the government is planning to cap exit payments made to public sector workers was predictable but no less disappointing for that.

The 2010 arrangements have helped the civil service to reduce its workforce dramatically over the last five years. HMRC itself has been reduced by over 10,000 since 2010, reductions achieved in part through voluntary exits. So why is the government coming back now and what is actually driving the changes? Well, the language provides a clue. Ministers talk about “hard-working taxpayers” on low salaries having to fund “huge pay-outs when well-paid people get made redundant”. They talk about “fat cats and golden goodbyes” and GOV.UK, uses the phrase “six-figure pay-outs for the best-paid public servants”. That is the language of envy but it is a million miles from the truth.

Let’s look at the facts. If, as looks likely, the redundancy cap includes the cost of early payment of pension then these proposals will hit those earning just above the median salary level in the civil service. We are well aware of the age profile of HMRC’s senior staff, and indeed that of our own membership; we have many members who have spent a large part of their career in the civil service. If they opt for early payment of pension as an alternative to a redundancy payment which is then paid seven or eight years before pension age then suddenly we are all hitting the magic “six figure” ceiling. And of course, the cap is not just about the Civil Service, it will have an impact on teachers, nurses, paramedics, firefighters and police officers. Indeed, this was recognised by the Conservatives when they made the announcement in January as they indicated that there would be protection for anyone earning less than £27,000 per annum.

It is also worrying that the government chooses to use this kind of language against its own “hard-working taxpayers”, some of whom happen to earn above-average salaries. Senior public servants receive those salaries because they do big, important jobs. Our members may earn higher than the average salary in Britain, but as we well know we also earn significantly less than we would by doing equivalent jobs in the private sector. The government almost appears embarrassed that they employ senior, professional, public servants at all.

Arbitrary caps, whether on pay levels or redundancy payments, rarely make good policy. The Civil Service faces a huge challenge over the coming years. It needs to continue to attract and motivate the best talent, while at the same time managing another significant reduction in staffing. These proposals will help with neither.